Software v. Attorney

How many people would be so excited if you foundsome brand new lawyer willing to prepare their trust for $500?  What a deal, right?  An experienced attorney like myself might charge $2,000, or more, for a living trust package for a husband and wife.  Some charge $5,000 and up… but of course they have fancy offices and are usually in the major cities of our fine state. However, let’s get back to the $500 special… or the Nolo Press do-it-yourself kit.  Is trust software for $49.95 really the same as what an experienced attorney can do for you?

Ok, you know the answer I am going to give because I am an experienced attorney and not a software salesman.  Seriously though, do people really think the fifty bucks spent on a software package or $500 spent on a paralegal or brand new attorney will be truly THE SAME as what an experienced estate planning attorney will do? In my opinion it is just silly to think you are getting the same thing.

Let me start by saying that I am not telling you that a fifty dollar software package or pre-printed form will might not work for some people.  It might. However, an estate plan is supposed to give you PEACE OF MIND.  Peace is defined as “the absence of mental stress or anxiety.”  This means when you put together your estate plan you want to KNOW it’s done right so you can find something else to worry about.  You are trying to save tens of thousands (if not hundreds of thousands) of dollars and thus want to KNOW your estate plan is prepared correctly. You do not want to leave your kids, or other loved ones, with a mess after you die.

I could write a book on why one should use an experienced estate planning attorney for their estate plan. However, this is supposed to be just a short blog entry so I will spare you the entire book.  Let’s talk about a few of the main reasons why an experienced attorney is going to be better for you.

First and foremost an experienced attorney makes it easy to FUND YOUR TRUST. An improperly funded trust is just a pile of paper.  You need to properly deed your house and other real estate holdings to the trust. Where do you get a copy of your former deed so that your new deed can be accurately prepared? Where do you get a preliminary change of ownership form that is required to be filed with each deed you record? How much does it cost to record a deed?  Where do you mail the deed fore recording? Do you need to mail copies or just the original?  How long does it take to record a deed (or, when should I get worried?)?  The list goes on and that’s just with the deed!  The transfer of banks and other investment accounts is even more full of questions!

Second, and semi-related to the above, how should I title my IRA, 401k, and other retirement account in relation to the trust?  Does your software package explain the ramifications of naming your spouse as beneficiary, your kids as beneficiary or even your trust as beneficiary?  Does your software package fill out the forms for you?  As an attorney with 15 years of experience funding trusts I know the answers to all these questions!

Third, can a software package adequately explain all of the trust distribution options to you so that you fully understand them?  Do you and your husband want an “A/B Trust?”  How much discretion should you give your trustee in making distributions to minor children?  Would it be advantageous to leave assets in trust for your children’s life and give them CREDITOR PROTECTION?  I don’t think your software program, or paralegal, or new attorney can explain all of those details. I was a new attorney once and I can assure you I have learned of a great number of options in 15 years… and, more importantly, multiple ways to explain it all so it makes sense to you.

Fourth, and the final point for today to keep this from becoming a book, experienced estate planning attorneys make it EASY for you. We walk you through an estate planning questionnaire, we prepare a rough draft and explain it to you, we ANSWER all your questions, we prepare final documents for signing, we notarize your documents without extra charge, we help you fund your trust, we store a copy of your documents in our files, and we serve you a hot cup of Starbuck’s coffee, with a smile on our face, when you come to our office!

In conclusion, hire a professional to do a specialized and important task like setting up your estate plan.  You probably don’t work on your car yourself, you certainly don’t act as your own doctor, so why would you act as your own attorney!?  Preparing an estate plan is far more than just filling out a few forms.  I encourage you to find an experienced estate planning attorney to work with. If you don’t know one, in your area, contact me and I will gladly give you some referrals as I know qualified attorneys throughout the state!

Gifting – a great Tax Saving Idea

Are you one of the people (or child of a person) who has “too much” money?  Some of my clients go as far as to call it “the problem” of having too much money.  Yes, it’s true many people just have too much money and Uncle Sam is waiting for you to die!  As I type this the Senate is hotly debating what to do with the estate tax exemption. For the time being we are at $3.5m per person.  Could they raise it? Yes. Could they lower it?  Sure. Could they keep it at $3.5m? Sure.  I would say anything is possible. However, if you have money, that might be taxed after you die, and you don’t need the money, let’s talk about your gifting program ASAP!

The simplest way to gift to your kids, or other loved ones, is by writing a check. You can currently give up to $13,000 per year to any one person you like. Additionally, you can make even larger gifts to charity which quality for a charitable deduction but we will talk about that another day. Back to the annual gifting… you can give up to $13,000 in assets during each calendar year. This means that a husband and wife can, collectively, give each child $26,000 per year. This means a husband and wife with two children can gift $52,000 per year. This means that a husband and wife, with two children and four grandchildren can gift $156,000 per year… TAX FREE!

If you have a large estate and have not yet given your loved ones any gifts this year break out that checkbook fast!  Let me make a suggestion… while you are in the checkbook why don’t you also write some gifting checks dated January 1, 2010!?

The earlier in the year you make the gift the better.  Yes, you could die and then lose the ability to gift for the year. However, I was actually referring to the fact that getting the money into your kid’s names means it will be growing in their estate rather than yours. If you already have a tax problem don’t make the problem worse. At close to 50% the estate tax is no joke. Every dollar you fail to give away might only be worth 50 cents at death. GIVE, GIVE, GIVE!

Can you use your $13,000 per year annual exemptions AHEAD of time?  Of course not, right?  Well, actually you can!  If you give money to a 529 college savings account you can use the next 5 years worth of gifts. You thus could write a check the week after each grandchild is born for $130,000. That money would have 18 years to grow for the grandkids and then pay out without tax under current law… as long as it’s used for educational expenses. WOW! That’s some bang for your gifting buck right there! I had one client do the five year front load for 8 grandkids. They wrote checks for about a million dollars in one day. That is some smart estate planning!

If you don’t have loved ones to give to then I really encourage you to consider giving to charities.  Even better than giving to loved ones, when you give to charity you get a tax deduction! You thus have reduced your estate size and lowered your current income tax bill!  Plus, you have helped people in need by carefully selecting the charity you give to.

Keep checking back as we will update you when the folks in DC figure out what they want to do with the estate tax rules. Knowing politicians I am sure it will be some creative idea they come up with!

Happy holidays to you and yours.

Economics of Hiring an Out of Town Attorney

Did you know your attorney can appear in most any courtoom in California while sitting at his or her desk? Just about every Court participates in CourtCall (a service connecting attorneys to courtrooms for a nominal fee) or allows attorneys to dial in to the Courthouse directly. Why does this matter to you? Generally speaking a probate court “appearance” is needed in most cases at some point.  Not all of course but in most. If your attorney’s office is in, or near, the city of the courthouse the Judge expects your attorney to show up in person. However, an out of town attorney is expected to appear by CourtCall.

With CourtCall the Judge and everybody else in the courtroom hears the phone call particpants over the speakers. This can make for an occasional embarrasement when a court call attorney forgets they are on speaker. Reminds me of that scene in one of the Leslie Nielsen Police Squad movies. Anyway, let’s go through the simple economics of this to YOU, the average client.

Let’s say Attorney 1 has his offices in Woodland Hills and your case is at the downtown Los Angeles Courthouse. Let’s say that attorney charges $300 per hour. Attorney 2 has his offices in Sacramento (and Roseville!) and charges $250 per hour.  For arguments sake assume both attorneys have been practicing law the same number of years and have the same exact credentials.  Let’s say your case has a 9:00 hearing. What time would attorney 1 need to leave his home or office in the valley to get to the 9:00 court hearing in downtown LA?  He has to drive, park his car, walk to the courthouse, up the elevator, etc….  He could leave the valley at 8:00 but no sure thing with LA traffic.  He could leave at 8:15 if he or she likes to cut it really close.  Attorney 2 can call up the courtroom at 8:58.  Hmmmmmm, what’s better economically for you the client?  Oh ya, and attorney 1 still has to drive back to their office after Court. On straight economics obviously it makes sense to hire an attorney, in another city, who is a certified specialist in estate planning, trust and proabte law.  They can appear by CourtCall, they charge a lower hourly rate since they are in a smaller city, and you the client come out way ahead!

Is CourtCall right for all cases?  No, of course not. If your case is likely to result in lengthy litigation then you should hire a local attorney or hire an out of town attorney with local contacts in the city of your case. In a litigated case you need local counsel in the courtroom arguing your case. However, few cases end up being litigated. In most probate cases it’s a matter of filing the right documents at the right times.  Thus an out of town attorney is right in most cases; particiularly for those cases in the big cities where traffic is horendous.

The point of this is to think about who you are hiring first and foremost. Do not worry as much about the geographics but rather think about the attorney, his credentials, his experience, his efficiency, his specialty, etc….

When I started writing this I did not intend for it be a sales pitch but it is now so let me tell you I am a certified specialist in estate planning, trust and probate law. I have been so certified by the State Bar of California board of legal specialization. I also have been rated “AV” by Martindale Hubbell which is their highest honor. I also have a great phone system so appearing by CourtCall is a breeze for me!

I also am highly efficient with email, phone, fax, FedEx and the US Mail. I have clients around the world. While there are some instances where a face to face meeting is nice there are plenty of others where the mediums of today work well which allow for more efficient representation. Evaluate all of your options before hiring your next attorney!

Oh wait, it’s 8:50 and I need to run to the rest room before I “appear” in Court in a far away county at 9:00!

Ratings and Reviews

10.0John Bernard Palley
Wealth Counsel Member
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